Dangote resumes US crude purchase after three months

The Dangote Petroleum Refinery has recommenced the purchase of crude oil from the United States in its ongoing efforts to ramp up oil production and enhance its refining capacity.

The new purchase comes after a three-month hiatus in purchasing crude from foreign countries, focusing instead on domestic supply.

A report by Bloomberg on Wednesday said the cargo conveying two million barrels of WTI Midland crude from Chevron Corp is due to be delivered to the refinery next month.

The latest development may be an indication that the naira-for-crude initiative by the Federal Government may have stalled or that the refinery is not getting enough crude supply from the Nigerian National Petroleum Company Limited.

“Dangote refinery purchased its first shipment of US oil after a hiatus of three months as the site continues to ramp up production.

“The plant purchased about two million barrels of WTI Midland crude from Chevron Corp,” the report said.

Chevron booked the supertanker Azure Nova to load crude from the US Gulf around December 5 to Dangote, according to tanker fixtures seen by Bloomberg.

Earlier this year, Dangote was typically receiving one or two supertankers of US crude every month alongside domestic supplies.

However, these imports were reduced around August following an agreement with the federal government that the NNPCL would supply crude oil to the refinery in naira rather than dollars.

The agreement stated that the refinery would take up to 400,000 barrels a day of Nigerian crude paid for in local currency.

Dangote is taking a growing role in US and European oil markets, after gradually raising purchases of crude from Nigeria and the US.

The plant’s pull on those barrels increases the competition for the oil faced by traditional buyers in Europe.

The report added that reasons for the return to US imports remain unclear, though a report from Sparta Commodities earlier this week suggests lower shipping costs may have made US oil more affordable in Europe recently.

On Monday, The Punch reported the refinery was seeking to raise billions of dollars to import crude oil and increase production.

The report said the Chairman of Dangote Group, Aliko Dangote, was in concrete talks with commercial lenders, development banks, oil traders, and other industry participants to raise funds for crude supplies to turn into refined products.

According to the report, the refinery would need a minimum supply of 300,000 b/d to secure more crude to reach its refinery’s capacity.

On Tuesday, the plant began refined petroleum product shipping to West African countries, a sign to traders that the mega-refinery’s operations could soon potentially shake up regional fuel markets.

In another development on Wednesday, the Dangote Group said it had done what international oil companies could not do by building a refinery in Nigeria.

The Vice President of Oil and Gas at Dangote Industries Limited, Devakumar Edwin, stated this while receiving members of the Senate Committee on Trade and Investment at the refinery complex in Lekki, Lagos State.

During the visit led by the Chairman of the committee, Sadiq Umar, Edwin told the senators that the Dangote Group did what Shell, Chevron, or ExxonMobil has never done in any part of the world.

According to him, a Nigerian company took up the challenge to build the largest single-train refinery in the world.

He said about six companies in the world could do the same.

“Here, a Nigerian company took up the challenge which nobody like Shell or Chevron or ExxonMobil has ever done in any part of the world. So, the Nigerian company—Dangote Projects Limited—took up the challenge and built the refinery on time. And this is the world’s largest single-train refinery,” he said.

Speaking, the Chairman of the Senate Committee on Trade and Investment, Umar, assured the refinery of the National Assembly’s support.

According to him, the $20bn project is a national asset that must be protected.

“For us as legislators, you can rest assured that we know what you have done here, we know what it means to the country. We will do anything within our power to see how we support you to succeed so that Nigeria can succeed.

“This investment we have seen here is an investment for the country and for the world, not necessarily for Dangote himself. It is our responsibility to see what we need to do to encourage him.

“I am sure you can see a lot of actions in what the president has done to support him so that the country will be better for it,” the senator said.

Located within the Lekki Free Zone in Lagos, the 650,000-capacity began production in January this year, releasing diesel and aviation fuel into the local market while exporting to other countries.

In September, the facility started producing premium motor spirits. This is after weeks-long controversies with IOCs over crude supply.

The President of the Dangote Group, Aliko Dangote, repeatedly accused the IOCs of refusing to sell crude to him, saying it was an attempt to sabotage the refinery.

After presidential interventions, the refinery started getting crude in naira to boost the local supply of petrol in naira.

It was learned that the refinery might export petrol to other West African countries soon.